BC mortgage brokers and realtors breathe a sigh of relief
The Office of the Superintendent of Financial institutions (OSFI) has reversed its proposed amendment to require borrowers to re-qualify for their mortgages at renewal. This decision is welcome to realtors, mortgage brokers and especially the homeowners – although many may have not known this proposal was even in the works.
“We are immensely pleased that OSFI has responded so quickly to industry concerns,” Mortgage Brokers Association of BC (MBABC) president Jared Dreyer said.
The proposal added a requirement for borrowers to re-qualify their mortgages at renewal, even if they remained with their same lender. This could have been catastrophic for some families that perhaps meet their obligations currently but are going through changes that might have meant they wouldn’t otherwise be approved for their existing mortgage commitment.
Self-employed people can't self disclose their income anymore and are required to provide proof or income tax returns. Can you imagine the entrepreneurial employee who quits her job to start her own company – with enough savings to continue with her mortgage commitments till she gets going – only to find she now doesn’t qualify to renew her existing mortgage?
I applaud the decision to reverse this proposal.
OSFI did, however, call on banks to periodically review a client’s current credit situation – they can do this anytime – to effectively evaluate their credit risk. This is probably a good idea as some people require guidance when it comes to the debt load they can handle.
Skip the latte, keep your money
I deal with clients everyday who have trouble making ends meet, yet still sign up for a Groupon that they really don’t need but seemed like such a “ good deal”. It pains me to see friends considering selling their family home as they find they can't comfortably make ends meet.
So I go over some basic financial situations and find they each "have to" buy a latte every morning at the corner coffee shop (that’s approximately $3,275 per year) and also go for some beers Friday afternoon that easily turns into $1,200 a year.
Not that I disapprove of having some fun. We Canadians spend more on home renovations than most other cultures, so why don’t we have the buddies over for a beer on our new deck, and why don’t we just get a cappuccino machine and make a coffee before going to work? I have talked myself out of a few listings this way, but in the end when I go for that beer on their deck I say “ I am so glad you stayed”.